On Friday, a U. S. judge appeared to be unconvinced about the bid that Uber wants as a quick pre-trial ruling, which says that the drivers working for the company are contractors and are not its employees.

Both Uber and Lyft which are App-based ride sharing services are facing separate lawsuits looking for class action status in the federal court of San Francisco. The drivers working for the companies contend that they are employees of the concern and must be entitled to refunds for expenses like maintenance of cars and filling of gas. As of now the drivers pay for those expenses from their own pocket.

The drivers argue that they must be considered as employees as the car ride service providing companies like Uber and Lyft have the right to hire and fire them anytime. The companies also need them to agree to an assured percentage of rides and also require clearing a check on their backgrounds.

If the ruling went against any of these two companies, it would considerably increase their costs and force them to shell out money for workers' compensation, social security as well as unemployment insurance.

In that case, the valuations for other startups could also be hurt, which depend upon on wide networks of individuals who provide rides and other services like cleaning houses.